What the Stafford Loan Interest Rate Hike Means for Students

Interest rates on new Stafford loans jumped Monday after lawmakers failed to reach a deal.

Student loan interest rates doubled on Monday, jumping from 3.4 to 6.8 percent, but it will be at least a year before borrowers feel the impact.

That's because the rate hike only applies to new loans – specifically new subsidized Stafford loans – taken out by undergraduates on or after July 1.

Incoming college freshmen borrowing for the fall semester will not be repaying those loans until six months after they leave school. For those who don't drop out, that is another four, five or even six years down the road. Seniors graduating in December won't feel the pinch until this time next year.

"It's not really a big deal. It's not the end of the world," says financial aid expert Mark Kantrowitz, publisher of Edvisors.com.

[Discover loan repayment tips for college dropouts.]

While doubling the interest rate sounds dramatic, the increase will amount to less than $20 per month for the average borrower, he says.

A state-by-state breakdown from the Center for American Progress, a left-leaning nonprofit think tank in Washington, D.C., shows what borrowers would save if Congress had extended the lower rates another year.

In California, where an estimated 550,900 students borrow Stafford loans, maintaining the 3.4 percent would save the average borrower $987 per year. That per-borrower savings is just shy of $900 in Texas, which has roughly 464,100 Stafford loan borrowers, according to the reports.

Not everyone is convinced that the higher rates will have minimal impact.

Danielle Beers, a student at the University of North Carolina—Wilmington, vented via Twitter.

As if my student loans were not causing me enough stress, I know have to pay DOUBLE the interest rate...THANK YOU CONGRESS..SO MUCH LOVE

— Danielle Beers (@daniellebeers) July 2, 2013

Beers was one of many students airing frustrations over the student loan interest rate increase on Twitter.

"It is appalling that Congress let rates double for student loans. You should be ashamed of yourselves for letting it happen" @IllyKay, who describes himself as "Just another 20-something with a bachelor's degree, in debt and underpaid," tweeted at his senator, Bill Nelson, D-Fla.

[Find tips and tools to help navigate financial aid.]

David Grow, chief financial officer at Western Governors University, estimates as many as 40,000 students at his university could feel the hit of this rate increase.

"I don't think they quite understand what the impact will be," he says, adding that incoming freshmen are particularly vulnerable. "I think it will weigh heavy on them as they're just beginning their education."

Despite the outrage, the new 6.8 percent rate is still a good deal for students, especially since holding rates at 3.4 percent for another year cost the government roughly $6 billion, says Kantrowitz, from Edvisors.com.

"That would be $6 billion less for Pell Grants or for some other priority," he says.

This is not the first time student borrowers have paid nearly 7 percent interest on Stafford loans. Rates fluctuated between 3.37 and 8.25 percent, with the latter being the cap, from 1994 until 2007. Those interest rates varied for students in school versus in repayment.

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5 Reasons International Students Should Consider MOOCs

Increasingly, MOOCs are being offered in languages other than English.

At 15, it seems unlikely Priya Prabhakar would know much about college.

But the rising high school sophomore has already taken six college courses from some of America's best universities, earning high marks in everything from poetry to computer programming.

Prabhakar, from Chennai, India, is one of thousands of students across the globe taking massive open online courses. And she can't get enough of them.

"I'm a curious person," says Prabhakar, who has already signed up for at least four more courses. "I have interests in many different fields and subjects." As a student contemplating her future career, she says MOOCs are great at fulfilling her curiosity about a variety of topics.

[Learn the basics of MOOCs.]

For decades, American-style higher education was out of reach for millions of international students. But now, thanks to MOOCs, students no longer have to hop on a plane and pay thousands of dollars in tuition to get a taste of the U.S. college experience.

Acing a MOOC won't help you earn a U.S. degree – yet. Most American universities won't accept transfer credit for the courses.

But that doesn't mean the classes aren't worthwhile. MOOCs can still inspire people, lead to additional job skills and impress future employers or admissions deans, experts say. Below are several reasons why international students might consider taking a MOOC.

1. The courses are free. To take a course from a world-renowned Harvard professor in the past, students likely would have had to shell out thousands of dollars. These days, students can watch that same professor lecture and follow his syllabus without spending a dime.

Students should note, though, that some MOOC providers charge fees to students who want to earn a certificate showing they successfully completed the course or to take a test proving their mastery.

2. The courses may be in your native language. Most MOOCs are offered by American professors and taught in English. But that is quickly changing.

"MOOCs are increasingly an international phenomenon," says Andrew Ng, cofounder of Coursera, the largest of the MOOC providers.

About 60 percent of Coursera's students are from outside of the United States. To keep that figure high and growing, Ng says the company is always looking to expand its offerings.

In the last few months, Coursera has added a limited number of courses taught in Italian, German, Chinese, French and Spanish.

Leaders of edX, another one of the major MOOC providers, have said they plan to offer more classes in different languages in the future, though English is the sole language now. Udacity, the third major player, states on its website that its courses offer subtitles in many different languages, including Spanish, Chinese, French and Portuguese.

3. MOOCs can inspire. Some international students take MOOCs simply for the joy of learning.

[Discover tips for studying in the United States.]

Tamara Duli, a Serbian undergraduate student at the International University of Novi Pazar studying English language and literature, says she's taken four Coursera classes on poetry, Greek and Roman mythology and other topics – just for her own enrichment.

Although the course work can be a bit much to handle on top of her regular school assignments, she says the classes are worth it in terms of the knowledge and inspiration she's gained.

"I have already enrolled in nine other courses," she wrote in an email. "I became utterly addicted. I just hope I'll manage them all."

Students such as Duli who are stirred by MOOCs may go on to do great things for their countries and communities, says Paul Corey, president of science, business and technology at Pearson, an education services company.

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Find Sales, Contests for College Savings Accounts

Take advantage of states offering waived enrollment fees on 529 college savings accounts.

Ohio parent Beth Cousino didn't know what to think when she saw a Facebook post for a cash contest to celebrate 529 Day on May 29. She has 529 plans, tax-advantaged college savings accounts, for each of her three children, but she had never heard of the event, now in its fifth year.

"The posting asked me to like the Facebook page," she says. Following that prompt, Cousino entered the College Savings Plans Network's Facebook sweepstakes.

"I completely forgot I entered the contest," she says. Fortunately for her, Cousino won $529 that she put in her 15-year-old's 529 plan account.

When parents think about shopping sales for their children, they're probably not thinking about college savings plans. But 529 plans run specials and contests throughout the year.

[Learn how to earn high interest with 529 plans.]

May 29 and College Savings Month, in September, tend to be popular times for states to offer incentives like waived fees, says Mike Fitzgerald, chairman of the College Savings Plans Network. "We have seen as many as 40 states do promotions during College Savings Month in the past."

On 529 Day, Missouri, Nevada and Oklahoma were among the states that gave out $529 cash prizes for college savings. An interactive map on the national nonprofit's website showed parents what promotions were offered in different states.

Parents interested in boosting their college savings should look for the following year-round promotions.

[Learn when to save with another state's 529 plan.]

1. Sales and specials: States run a variety of sales for different kinds of 529 plans. In Washington and Pennsylvania, prepaid tuition plans, a type of 529 plan that allows parents to buy a set amount of tuition in advance, waived program enrollment fees in May.

In Pennsylvania, the $50 program enrollment fee for the PA 529 Guaranteed Savings Plan is waived in May, August, September and December, says Doug Rohanna, a Pennsylvania deputy state treasurer.

In August, Pennsylvania also runs a Beat the Rate special. During the month, parents can purchase tuition credits before the rates rise each September. The difference between buying a community college credit in August versus September last year was more than 5 percent.

2. Drawings: States such as Indiana, Nevada and Oklahoma give away money in random drawings. In Indiana, drawings for 529 certificate of deposit accounts worth $1,529 were held for 529 Day in certain bank branches.

"In September we'll give away two $2,500 529 plan accounts to winners of a random drawing" of people who register on the organization's website, says Jodi Golden, executive director of the Indiana Education Savings Authority, which oversees the state's CollegeChoice 529 plans.

"When we look at our budget and see we have money available from partnerships or sponsorships, we offer a promotion," she says. "Parents should check our website year-round for special offers."

[Employ workplace benefits to maximize 529 plan savings.]

3. Essay contests: In Nebraska, various contests are run throughout the year to give families a college savings boost.

One unusual contest asks grandparents to write a letter to their grandchildren about the importance of education. Grandparents can win between $1,000 and $1,500 for a grandchild's education.

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Follow a Summer Study Plan to Maximize SAT Preparation

Reading literature is a natural way to broaden vocabulary and improve SAT results.

October's changing leaves and SAT dates might seem far away in these early summer days, but the weeks and months speed by quickly. For students planning to take the October SAT, summer offers an opportunity for a slow and steady approach to test preparation.

The following summer SAT study guide provides students with a plan to make the most of the summer months.

1. Organize a study plan: A roughly 12-week summer study plan allows students to retain a lot of material. Because of that extra time, a plan should be tailored to the student's strengths and challenges with SAT topics. The best way to assess the focus of a study plan is to first take a practice exam.

Before the Fourth of July, students should take a timed practice exam in a test environment. Students should score the exam using three colors to identify the areas where they experienced low, middle and high levels of difficulty.

[Understand these common misconceptions about standardized tests.]

The next step is to note the following three tasks on an easily visible calendar, and carry them out for the first five weeks of study:

• Three days per week, take partial, timed exams focusing on your most challenging sections.

• Two days per week, practice untimed questions in your midlevel areas.

• Practice your strong areas for 30-60 minutes a day in fun ways.

Over the course of five weeks, use the colors from the previous timed exam to note which types of questions shifted from high to medium to low levels of difficulty.

Summer is also your opportunity to master two important tricks and skills for the SAT. First, memorize the top SAT vocabulary words, such as the top 200 words on Quizlet. Second, learn to simplify math problems with the plug-in method. This strategy involves inserting a number to get a value when math problems mention integers such as "x" or "y."

A great deal of success on the SAT is not only knowing the materials, but knowing how to take the test. Techniques like the plug-in method for SAT math mastery take time to learn – something summer study provides. More information on test-taking techniques is available through online sources and books.

2. Take SAT study on summer adventures: SAT prep is very portable, and it can be fun. Gather up some crossword and Sudoku puzzles, a beach or hiking blanket and enjoy the summer weather while you study.

Puzzles require the key skill of creative critical thinking, which helps keep a student's mind nimble while also stepping outside the SAT format.

Excerpts of internationally recognized journal articles and early 20th-century literature make for great on-the-go summer study sessions. Reading Scientific American or a short story by James Joyce might not be the same as following the Kardashians on Twitter, but it helps students develop an ease with sophisticated writing, which can increase reading comprehension and vocabulary.

[Check out the debate over the best summer reading titles.]

Social studying plans heighten morale, so invite others to join your study plan. Play Scrabble to boost on-demand vocabulary skills. Have friends challenge you with math or grammar flashcards.

3. Gear up for game day: Around week six, students should take a second timed exam and capitalize on their improvements. Note how much of the exam you completed when time expired. Score the exam, but also finish the rest of the questions untimed. Adjust your study calendar and spend less time practicing items that have become easy.

From weeks seven to 10, practice by taking two sections per week under timed conditions in your remaining high-challenge areas, one per week in midlevel areas and one untimed practice session in low-challenge areas. Make sure also to include one entire timed essay section each week, even if the essay poses a low level of difficulty.

Around the end of August, consider signing up for SAT tutoring for help with any continuing trouble spots. Even one or two sessions can help open up creative solutions for studying roadblocks on a given section.

[Explore how more students are taking the SAT for free.]

During the last two weeks of September, adjust your study calendar to accommodate three timed exams. Just like any activity that requires conditioning for success, SAT prep includes building the stamina it takes to sit for almost four hours.

The more frequently students experience test-like conditions, the more agile they will be on test day. Mimic those conditions by taking the test at any location that will challenge your concentration and help you refine your focus.

Starting SAT prep now will help you take a deliberate approach and avoid scrambling to prepare during the school year. Those puzzle-beach-blanket days will be worth it in the end.

DeAnna Rivera is a professional tutor with Varsity Tutors. She earned her bachelor's degree in English from the State University of New York — Stony Brook and a J.D. from the University of Arizona.

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Find Health Care Opportunities for B-School Students

The Affordable Care Act may lead to more health care jobs for MBAs.

The Bureau of Labor Statistics has some bad news for those on the job hunt. The May unemployment rate was 7.6 percent – a slight growth compared to April.

The job market for many may be growing more competitive, but at least one industry will be welcoming a surge of MBA graduates: health care.

Of employers in health care worldwide, 89 percent plan to hire MBA graduates this year, according to the 2013 Corporate Recruiters Survey. In 2012, only 77 percent of health care employers were expected to do this.

[Get a boost in b-school from extracurriculars.]

For potential MBA candidates looking to establish a career in health care, the job options are many, says June Kinney, associate director of the health care management program at the Wharton School at University of Pennsylvania.

"They could be consultants. They could be investors. They could be operations managers. Or they can be entrepreneurs," she says.

The part-time MBA health care management program at the Quinlan School of Business at Loyola University Chicago caters to students who already work in the field but want to advance.

"They may be looking at a director position within the hospital that may be over a clinical area, or maybe even an administrative area. But they also may be in a pharmaceutical firm or medical device firm," says Pamela McCoy, an assistant dean at Quinlan.

[Start a business in business school.]

Many of these jobs have been around for years, experts say. But laws by the federal government have certainly created new opportunities.

"It's really driven by all of the Affordable Care Act provisions and impact on the field," Kinney says, referencing the health care reform movement known as Obamacare.

"There's a lot of people going into, obviously, consulting because all of the major providers and players in the field are looking for advice about how to change their operations, how to change their strategies."

Technology has also expanded the number of jobs.

Entrepreneurs are building new apps to connect health care providers to patients and business investors are needed to support this growth, Kinney says. Innovations in health care technology have also paved the way for more health care data to be collected. MBA graduates skilled in analyzing data can better understand patterns of behavior among specific health care populations, Kinney says.

[Make money in social enterprise as a b-school graduate.]

More physicians are also going into large, group practices, which create openings for MBAs, says James Henderson, academic director of the MBA health care program at the Hankamer School of Business at Baylor University.

"A physician who was a solo practitioner before couldn't afford to hire an office manager, a trained administrator," he says. "But if you've got a physicians' group that has 75 physicians, they probably have a couple of MBA or graduate trained people that are actually running their operation."

Business students interested in health care usually take standard MBA classes such as accounting, finance and marketing. Through specialized programs, they also take courses specific to the field, such as health care economics, health care financing and health policy. They can use internships to get hands-on experience, or attend a school that provides residency options.

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Match Your Personality With B-School Teaching Style

Consider your personality and the way you learn best when evaluating MBA programs.

Many MBA applicants make the same wrong assumption: No matter which top business school you attend, its teaching style will be more or less the same.

While there are similarities across the top-tier programs, each school has a different teaching style. There's the case method approach; lecture-based instruction; and the experiential learning and team-based focus approach. Some schools concentrate almost entirely on one style, while others employ a mixture.

Finding a fit in teaching style is important, and I advise clients to seek out a program where they can thrive and feel comfortable. However, I find that this piece of the puzzle is often pushed aside, with more weight placed on factors like rankings, career center offerings, location and culture.

In fact, teaching style is often one of the last things applicants focus on. Although there are many different aspects of a program to consider as you select your target schools, I believe this one should have more weight, as it not only directly affects your enjoyment of your two-year investment, but the quality of knowledge that you walk away with.

[Consider these questions before applying to b-school.]

• Case method: The case method approach was established by Harvard Business School more than a century ago and is still widely used at top MBA programs worldwide. With this method, students analyze and debate authentic management scenarios to create recommendations that the firm in question should employ in the future.

Harvard relies on case studies for approximately 80 percent of its instruction, and students at University of Virginia's Darden School of Business are exposed to more than 500 cases in a variety of industries and functions during their two-year program.

Considered by many to be the gold standard in management education, the case method relies on lively class discussions with myriad points of view. A good case analysis requires a lot of preparation from students, who must feel at ease sharing their ideas in front of large groups.

Gregarious personalities will thrive in this environment, while shy individuals may cringe at the thought of showing up to class. This is not the learning environment for those uncomfortable speaking in front of strangers or those who fear they might say something embarrassing.

"Ask yourself if you find this method of learning intriguing and exciting," Dee Leopold, the director of admissions at Harvard Business School, advised applicants last fall.

• Lecture: All top MBA programs include courses taught using a lecture format, though some schools stand out for their significant use of this traditional pedagogic technique. According to the MBA-focused website Poets & Quants, Carnegie Mellon University's Tepper School of Business tops the list with approximately 50 percent lecture-based instruction, while the lecture format at University of Southern California's Marshall School of Business comes in as a close second at 48 percent.

The Anderson School of Management at UCLA, Vanderbilt University's Owen Graduate School of Management and Said Business School at the University of Oxford use lectures about 40 percent of the time.

[Follow these steps to make the most of your b-school campus visit.]

Fans of the lecture method believe this is the best way to concretely teach students the business concepts and theories they will need once they're back in the work force. This environment may also be more comfortable for introverted students, as well as those who enjoy absorbing the wisdom of a seasoned professor.

In some instances, the lecture approach is simply the most expeditious way to get the information across. Columbia Business School devotes about 40 percent of class time to lecture and 40 percent to case studies.

Vice Dean Amir Ziv tells MBA Channel, "If you teach something really simple, cases are much too time-consuming. In the same time frame you can either cover two cases or six other things when lecturing."

• Experiential approach: In recent years, more and more schools have expanded the experiential components in their curricula, adding in more team challenges, simulations, field work and extracurricular activities. Poets & Quants reports that Vanderbilt's Owen tops the list at 30 percent of courses using experiential instruction. At Owen, students have access to industry-focused immersion experiences, conferences, career treks, case competitions, entrepreneurial opportunities and more.

[Don't forget to join extracurriculars during b-school.]

Another leader in this area of action-based learning is the University of Michigan—Ann Arbor's Ross School of Business, which has a seven-week, full-time consulting project known as the Multi-disciplinary Action Project. Ross connects first-year MBA students with corporate, entrepreneurial and nonprofit projects both in the U.S. and abroad that require thoughtful recommendations on organizational challenges.

Even Harvard got into the act in fall 2011, launching the yearlong Field Immersion Experiences for Leadership Development course for first-year students, which offers small-group learning experiences that are experiential, immersive and field-based.

This hands-on approach to learning benefits those with an entrepreneurial spirit, as well as generalists who enjoy working in groups and want to learn how to get things done. Unlike the lecture and case methods, which focus on theory, experiential learning encourages students to learn by doing.

There is significant variation in how material is presented in an MBA program. Take a close look at your personal preferences and learning style to find the business school that's best for you.

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